Not All Recharacterizations Have Gone Away

You may recall that the ability to recharacterize a Roth IRA conversion went away as part of the tax cut that passed in 2017. It wasn’t a major sticking point of the legislation, but it did create some concern about how it could affect those saving for retirement. However, I want to remind you that only recharacterization of Roth IRA conversions went away and that the ability to recharacterize other types of transactions still remains a possibility. For example, if you made a Roth IRA contribution but did not realize that you were above the income threshold to do so, Continue reading Not All Recharacterizations Have Gone Away

Help Your Children Get a Let Up in Retirement

Retirement can be a long way off for teenagers, but given how much retirement can cost–and the costs will probably continue to rise throughout future generations–there’s no such thing as getting too early of a head start. No, you teenager might not fully appreciate how much such steps may help in the future, but that shouldn’t be a good enough reason not to at least talk to your teenager about starting to save for retirement as soon as they are able. Of course, you can start off through conversation. However, if you really want to make an impression, you may Continue reading Help Your Children Get a Let Up in Retirement

The Stretch IRA is Dead. Does That Mean More Freedom?

If you’ve been staying on top of retirement news over the past 12 months, then you’ve probably read about the passage of the SECURE Act and it’s termination of the stretch IRA as an estate planning tool. Just a quick refresher, but a stretch IRA was an IRA inherited by a beneficiary in which the beneficiary then took required minimum distributions (RMDs) according to his/her life expectancy and not that of the original IRA owner. If the IRA was inherited by a young beneficiary, that meant the funds could grow, possibly over decades, before the inheriting beneficiary reaches 72 and Continue reading The Stretch IRA is Dead. Does That Mean More Freedom?

Take Advantage of That Delayed IRA Contribution Deadline

Have you made an IRA contribution for 2019 yet? Are you worried that you might not get the chance to? Well, there is good news. While you probably heard that the IRS extended the deadline for filing taxes to July 31, you probably did not know that the deadline for making a prior year contribution was pushed back to July 15. That’s three extra months! That might not seem like a big deal, but it could be for many Americans who didn’t get to make a contribution for 2019. If you didn’t get to make a contribution–and of course have Continue reading Take Advantage of That Delayed IRA Contribution Deadline

Have You Thought About a Roth Conversion?

With the stock market appearing to head towards a–dare I say it–recession, now might seem like an odd time to talk about converting your traditional IRA to a Roth IRA. However, converting when the markets are low actually might be the best time to do so. When it comes to Roth IRA conversions, the tax bill for doing so is based on the value of your traditional IRA assets. Thus, when the markets are down, there’s a really good chance your IRA assets are down too, which means a lower tax number. As for the actual tax hit, as you Continue reading Have You Thought About a Roth Conversion?

Be Sure to Keep Inherited IRAs and Your Own IRAs Separated

If you have more than one IRA, you can aggregate the required minimum distributions (RMDs) and take them from one IRA. Most IRA owners are familiar with this allowance. However, not everyone is aware of that fact that you cannot include inherited IRAs as part of that aggregation. It can be easy to overlook. It should be noted though, that if you inherited multiple IRAs of the same type (Roth vs. traditional) from the same person, you can aggregate the RMDs from those. In short, if you have multiple IRAs, one of which is an inherited IRA, you will need Continue reading Be Sure to Keep Inherited IRAs and Your Own IRAs Separated

Small Business Owner? Don’t Forgo Retirement Saving

If you are a freelancer or small business owner, you probably have a lot to worry about when it comes to your work or business. You have expenses to track, work to do, clients to satisfy, and maybe an employee or two to oversee. With all that, it can be easy to forget about saving for retirement. Not only that, but you don’t have the reminders regarding opening a retirement account or automatic retirement account enrollment that are standards in larger business and corporations. Thus, it’s imperative that you take it upon yourself to think about and take the required Continue reading Small Business Owner? Don’t Forgo Retirement Saving

Don’t Forget The IRA Contribution Correction Deadline!

Did you make an IRA contribution only to later find out that your were not eligible to make that contribution? Or maybe you made a contribution and later decided that you wanted to use that money elsewhere? Whatever the reason, just know that you can essentially take back a Roth IRA or Traditional IRA contribution, provided you file the paperwork for doing so on time. The deadline for correcting an IRA contribution is October 15 of the year after you made the contribution. That might seem like a random deadline, but I can assure you it is not. It’s exactly Continue reading Don’t Forget The IRA Contribution Correction Deadline!

The Cautions of Backdoor Roth IRA Conversions

A backdoor Roth IRA conversion can be tempting if you are considering retiring early and are currently over the income limits for a Roth IRA contribution. In case you are unfamiliar, a backdoor Roth IRA conversion is where you contribute money to a traditional IRA and then convert that money into a Roth IRA. This is a useful transaction for those who earn too much income to contribute to a Roth IRA as Traditional IRAs have no income limits. It’s also a perfectly legal transaction. However, when doing a backdoor conversion, keep in mind that the taxman will get his Continue reading The Cautions of Backdoor Roth IRA Conversions

Taking Advantage of the Retirement Sweet Spot

As you move through your career towards retirement, you will inevitably spend time planning for the future. As part of that planning, you should make sure to take advantage of the IRA “sweet spot” that exists between ages 59 1/2 and 70 1/2. What makes that time period so sweet? Well, for starters, you can start taking distributions from your IRA and not get hit with a early distribution penalty. Now, you will have to pay taxes on that money, but nothing more. You are not required to take money out during that period, but it’s an option. It’s also Continue reading Taking Advantage of the Retirement Sweet Spot